Virtual currencies will compete with national currencies: Michael Jordaan

Michael Jordaan, the former CEO of First National Bank (FNB), has thrown his voice behind the recent surge in the value and growing popularity of cryptocurrencies.

Speaking at the Software AG Innovation Tour 2017 event in Johannesburg on Thursday, Jordaan said that he believes that cryptocurrencies will compete with national currencies by as early as 2025.

Cryptocurrency has been attracting mainstream attention in 2017, which has resulted in notable growth in trade volumes and token values.

The former banker, who now heads up a private investment company, Montegray Capital, said that virtual currencies are likely to make central banks obsolete, and could challenge the current banking model as, essentially, transfers will be free.

Bloomberg reported that central banks from across Europe and Asia are looking into virtual currencies, while the People’s Bank of China has run trials of its own prototype cryptocurrency, and the Danish central bank is considering minting e-krone.

“The central bank digital currency would be like a paper bill except digital,” Dartmouth College economics professor Andrew Levin said in an interview on Bloomberg Television. For example, “it would be representing a US dollar, but it would be basically free to use.”

Earlier this week, the International Monetary Fund (IMF) published a discussion document indicating that banks around the world should begin to seriously consider investing in cryptocurrencies and other fintech opportunities, as a means of adapting to new consumer and technological demands.

The South African Reserve Bank (Sarb) has said that it is open to issuing a national digital currency, which would likely be based on Blockchain or Distributed Ledger Technology (DLT), according to a report by Moneyweb.

“If we go the route of issuing a digital currency, the objective would be to take advantage of emerging technologies so that we reap the benefits,” said Tim Masela, head of the National Payments System at the Sarb.